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Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change, as Modified by Partial Amendment No. 1, To Exempt Specified Collective Trust Funds From FINRA Rules 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and 5131(b) (New Issue Allocations and Distributions)
Plain English Summary
FINRA has approved a new rule that allows certain collective trust funds (CTFs) to be exempt from specific regulations regarding the purchase and sale of initial public offerings. This change primarily affects trustees or managers of these funds, as they can now accept investments from retirement plans without being subject to some of the usual restrictions. Insurance agents should be aware of this update and consider how it may impact their clients' investment options in retirement plans.
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trustees or managers.
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FINRA further stated that the Exchange Act's “exempted security” definition includes “any interest or participation in a single trust fund, or a collective trust fund maintained by a bank, or any security arising out of a contract issued by an <span class="match">insurance</span> company, which interest, participation, or security is issued in connection with a qualified plan,” as defined in Section 3(a)(12)(C). Thus, by definition, CTFs can accept investments only from retirement plans meeting certain criteria,
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which FINRA stated further